Expansion has always been the step forward for striving businesses. And also, inherently risky.
Firstly, congratulations if you’re already up the ladder, and now are looking to branch out to newer locations.
Regardless of what industry you belong to, the decision to expand to newer locations has never been easy or riskless. In fact, failure to assess the location at a granular level with all the expenses and risks that tag along could jeopardize not only the success of your new site but also the business as a whole.
The location of your business plays a huge role in attracting and retaining employees since many of these employees keep a close eye on where your organization is based to maintain a healthy work-life balance. To ensure you’re expanding in the right direction, using location intelligence and analytics is also a great option.
A good location can add to your company’s long-term success, and a poor one can cost you millions of dollars in lost talent, productivity, and capital.
In this article, we have listed a few of those considerations you should keep in mind before jumping into this decision.
Do it for the right reasons.
Having clear objectives in place lays a concrete foundation for business expansion. Ask yourself these questions:
- Are you expanding to better satisfy your customers and their expectations, or to penetrate a new market altogether? Or, is it for survival, or social responsibility?
- Is access to a better talent pool your primary reason for expanding your business? If so, do you have a plan and other training resources in place?
- Are you looking to improve your branding, reputation, and prestige with this new location? If so, have you considered the return on investments?
Reflecting on the way of expansion, with the least possible cost and capital involved can help make your expansion successful.
Count on your achievements.
One of the most common fallouts of business owners is neglecting the processes that made their business a success in the first place. The structure and processes that led to the success of your business at the former location will help you cash on the opportunities at the newer locations as well.
Replicating and quantifying your business processes can go a long way. Therefore, document your processes and success stories to make them easier to duplicate and pass on to the new personnel at the new location.
Using location smart tools like Lepton’s SmartMarket, you can even study historic patterns and trends that led to higher revenues and positive outcomes.
Stay updated with your financial analysis
As a business owner, you need to be aware of the cash flow requirements of the new location you’re planning to expand to. Moreover, you need to fix a time frame for your second location to start generating revenue.
Furthermore, you need to have enough cash flow planning from the first location (presumably profitable) to make do for the second one if it doesn’t cross the break-even mark in the forecasted time period. Also, identify differences between your existing market and your target audience, and adjust your sales projections accordingly.
Other key drivers of expenses like recruiting, training, etc. also need to be evaluated before making the huge leap in order to cover any overheads. The paying capacity and affluence level of the target audience also play a major role in anticipating revenue and sales. Location intelligence and analytics can help you gauge the buying behavior of your audience in a specific area. With tools like Lepton’s SmartMarket, you get immersive, user-friendly dashboards that help you interpret these key metrics at a glance.
Be mindful of the differences in corporate strategy, technology, and leadership.
Every region or location has a different style of working and interacting within the organization. Make sure you study these differences well in advance in order to negotiate processes and modus operandi. Different organizations operate on different structures. What might work for you might not work for others.
For example, in some cases organizations opt for a centralized head office with meeting rooms along with multiple smaller spokes across other regions. Meanwhile, some prefer large and fancy headquarters in metropolitan areas.
Again, it depends on the business requirements and what works best to optimize your overall performance.
Evaluate the dynamics of the city carefully.
The power of adequate market research is underrated. Being able to anticipate revenue projections and make relevant decisions comes in handy as a superpower while expanding to newer locations.
This is the most important and interesting part of business expansion. Location intelligence and analytics play a key role in helping you analyze and evaluate the potential of a new location. Not just this, Lepton’s SmartMarket also helps you create predictive models to anticipate sales and identify gaps in demographics if any.
Capabilities of location intelligence and tools like Lepton’s SmartMarket.
- Evaluation of city dynamics
- Identification of competitors’ location using heat maps
- Spotting target areas and ranking them on the basis of predefined demographic parameters
- Analyzing footfall index
- Observing affluence metrics such as mobile device data–count of iPhone users, android users in a locality
- Gap analysis
- Anticipating sales and revenue
Gathering POIs (points of interest)
- Categorizing the locality into sixteen major categories like shopping malls, restaurants, cinema halls, etc.
- Data collected and reinforced through periodic ground survey
- Categories might differ for different businesses, choose from over 75 lakhs POIs across India
- Get useful datasets such as infrastructure, toll plazas, and more
- Combine demographic, business, lifestyle, spending, and census data with map-based analytics
Business expansion is the most important and strategic decision of an organization that can actually impact the long-term success and continuity of a business. Location intelligence will help you optimize this decision by providing valuable insights into the market you plan to enter. You can evaluate and gauge the potential of the market using a plethora of features and immersive dashboards. Tools like Lepton’s SmartMarket allow you to future-proof your expansion strategy according to the current trends.
If you’re one of those looking to expand your business operations to a newer location, let’s show you around. Get in touch and book your demo now!